June 07, 2004

Harry Dexter White Was a Security Risk

Now come Roger Sandilands and Jim Boughton before the bar of history, pleading the innocence of Harry Dexter White (and Laughlin Currie) of charges that they were spies for Joseph Vissarionovich Djugashvili.

Let me focus on White.

Up until recently the public evidence that White was a spy for Stalin was that Whittaker Chambers said so. But Whittaker Chambers was a very strange man--someone who sees no essential difference between Marx and Keynes; someone who said that Khrushchev's 1956 denunciation of Stalin's terror made Communism not less but more dangerous; and someone who rewrote Theodore White's dispatches from WWII China to make Chiang Kai-Shek appear to be the noble, competent, and democratic Hope of China. As either a liar, a loon, or both, Chambers's unsupported statements have little credibility. It strongly looks as though he was right about Hiss (but I am told that in Blind Ambition Dean says that Nixon said that Hiss was framed), but about what else?

But the public release of the VENONA decryption effort told us of the following message to Moscow in August of 1944. If true, the message is absolutely devastating:

As regards the technique of further work with us[,] [White] [2 groups unrecovered] ready for any self-sacrifice[;] he himself does not think about his personal security, but a compromise [PROVAL] would lead to a political scandal and [1 group unrecovered] of all supporters of the [N]ew [Deal], therefore he should be very cautious. He asked whether he should [5 groups unrecovered] his work with us. I [replied] that he should refrain. [White] has no suitable apartment for a permanent meeting place[;] all his friends are family people. Meetings could be held at their houses [if arranged so] taht one meeting devolved on each every 4-5 months. He proposes occasional conversations lasting up to half an hour while driving in his automobile.

Boughton and Sandilands (2003), "Politics and the Attack on FDR's Economists: From the Grand Alliance to the Cold War," Intelligence and National Security 18:3 (Autumn), pp. 73-99, make the following points:

The cable was not written by the person who met with White.

The person who met with White--who had the codename 'Koltsov'--has not been identified, but it is known that he was not an intelligence agent (although he was acting under instructions from the NKVD in seeking his meeting with White).

Bruce Craig believes that Koltsov was an accredited member of the Soviet Bretton Woods delegation.

Boughton and Sandilands conclude that the balance of the probabilities is that "White began this conversation thinking he was merely discussing policy matters with a colleague from an allied country.... A reasonable interpretation is that White... offered the alternative of driving him to work occasionally.... Koltsov, who was not an intelligence agent and who may have felt uncomfortable with this vague outcome, quite likely puffed up his account of [the meeting] to the NKVD with supporting details that made the meeting look more like a success."

They make a moderately strong case. But it rests on the possibility that the Soviet system was deceiving itself--that agents and others were desperate to report that they were more successful at espionage than they actually were. I can certainly see the motive to do so. But I cannot judge how frequent such passage of misinformation up the line was.

Were I on a jury, I certainly would not convict White of espionage on the basis of the evidence we have, even including VENONA. I'm not sure the evidence passes the "clear and convincing standard." Nevertheless I think that even though Boughton and Sandilands have pleaded their case well, there is enough evidence to classify White as a genuine "security risk."

There is, of course, one more point that needs to be made: If Harry Dexter White was indeed a spy for J.V. Stalin, never did a tyrant receive worse service than Stalin did from White. The post-WWII North Atlantic alliance was so strong and such a barrier to the Soviet Union primarily because post-WWII economic growth was so strong, and Harry Dexter White's work at institution-building played as large a role in laying the foundations for those Thirty Glorious Years of economic growth as anyone's.

I think your scenario makes sense. Fifteen years ago I found myself in a (much lower)similar situation with respect to a KGB colonel with whom I had academic contact and who I knew in Moscow. He asked me to make some discrete inquiries into the Armenian community (he was responsible for ethnic issues) in my city. I was rather loathe to do so, but the actual request did not require anything more than picking up a couple of local ethnic newspapers and sending them back. Nothing in the nature of high spy-trade. The man later became minister under Yeltsin. I think White was as you say -- meeting with allies every day, and clearly bright enough -- we've all read his book --not to give away state secrets. The whole business sounds to me like a set-up. Too complicated at this distance to figure out why unless you are doing a dissertation on it.

"But it rests on the possibility that the Soviet system was deceiving itself--that agents and others were desperate to report that they were more successful at espionage than they actually were. I can certainly see the motive to do so. But I cannot judge how frequent such passage of misinformation up the line was."

Yes, it was deceiving itself, although not voluntarily. As in every organization where people are rated on their performance, there is an incentive to manage the perception. Especially when the consequences of perceived non-performance can be drastic -- don't forget, that was not a free society, and losing some "privileges" like preferential treatment in the allocation of apartments and other essentials, access to residential telephone service, etc. is a big deal.

The clandestine nature of the intelligence business where by its very nature it is hard to independently verify information does not help honesty either.

Did we not have recent examples of, well, intelligence fudging in the Western hemisphere? Chalabi, anybody?

“... but the actual request did not require anything more than picking up a couple of local ethnic newspapers... “

As I understand the spy business, the recruitment of an asset starts by asking him to do something fairly harmless, something that’s “Nothing in the nature of high spy-trade. “ But that harmless little task eventually escalates to more compromising activity.

The Venona intercepts are far less than they were billed, since many of the personalities were never clearly identified and the veracity of the information not clear. Intelligence is difficult stuff and blunders are all too common. Unfortunately, the public is entranced by having secrets laid out before it and doesn't stop to think that these secrets may be treasures or they may be trash.

But Dean could simply be mistaken. Or Dean is playing games himself. I recently read the first part of his new book “Worse than Nixon.” I was not impressed. His accusation that Bush engaged in insider trading was a carefully crafted half-truth. Harken Energy Group (HEC) opened at $2.38 and closed at $3.00 the day *before* (20 Aug. 1990) the announcement of its second quarter loss. On the day of the announcement, it opened at $3.00, and closed at $2.38 on a moderate volume of 81,400 shares. But the day after the announcement, HEC stock jumped back to close at $3.00. In other words, the announcement had no effect on the stock price. In the case of material information, the share price plummets on large volume, and stays down. I think Dean was being deliberately deceptive.

"He asked whether he should [5 groups unrecovered] his work with us. I [replied] that he should refrain." It would be nice to find those 5 groups in the KGB archives. On the face of it, the message says that White was keener than the KGB to cooperate. The rest of the mesage suggests that he problem was logistic, but there's an intriguing possibility that the missing phrase is something like "coordinate positions with us", and the KGB couldn't respond because they had no idea how to advise White. According to Andrew and Gordievsky's history of the KGB, the purge of the cosmpolitan Central European agents like Willi Muntzenberg had left the KGB staffed by deeply provincial Great Russian apparatchiks who were incapable of understanding what White and Keynes were arguing about.

"Especially when the consequences of perceived non-performance can be drastic -- don't forget, that was not a free society, and losing some "privileges" like preferential treatment in the allocation of apartments and other essentials, access to residential telephone service, etc. is a big deal."

Posted by cm at June 7, 2004 08:43 PM

Or losing the 'privilege' of *not* getting a bullet to the head, after a torture-extracted confession for counter-revolutionary activities.

Hooooo boy! This again. There is evidence aplenty against White, beyond Chambers testimony, and more than the single Venona decrypt mentioned (and not even half of Venona has been decrypted).

Briefly, in addition to Chambers first hand testimony that White was a spy, there is also Elizabeth Bentley's (made without knowledge of Chambers' "witness"). And Chambers' testimony is confirmed by four handwritten notes from White that were part of the Pumpkin Papers stash.

Here's (AGAIN)the Venona cable in which Moscow offers to pay White's daughter's college tuition, so that White can afford to keep his government job: http://www.odci.gov/csi/books/venona/b71.gif

Igor Gouzenko (Soviet defector in Canada) brought documents with him clearly identifying White as a Soviet Agent. In 1945.

Then there is the testimony of the former KGB operative who gave White the assignment (in the summer of 1941) of provoking the Japanese to attack America to relieve pressure on the Soviet Union in the wake of Hitler's attack. An assignment White undertook successfully. Again, a Venona cable partially confirms this story.

It was also convincing to the SEC, and that’s what counts. However if you read me carefully, you’ll see that my comment was not a defense of Bush, but a comment on Dean’s credibility. Even if Bush were guilty (from other evidence), Dean himself would still be guilty of trying to manipulate the reader by providing deceptive information in his book. Most of the time we can’t check the facts easily, but in this case we can look up the price of the stock. Don’t take my word for it. Read Dean and then go to Yahoo finance and check the historical stock prices for HEC.

During the past hour, I have read a few paragraphs about Harry Dexter White. I think he was merely an internationalist, certainly capable of seeing the world in terms that McCharty's alcohol-crippled mind could not begin to comprehend. And here is how I feel about him:

If even Brad Delong here doesn't mind slapping the stigmata of "security risk" on Harry Dexter White, then I think he was just too good a man for this world; he should have never bothered trying to find and show a better way above and beyond a myopic view of narrow national interest.

Security risk! Pah!

Harry Dexter White should have gone playing golf, instead of working so hard; he might have lived a few years longer and not be called a "security risk" for all his work and caring!

Security risk, says he!

Bradford Delong, I think you owe an apology to that man's memory. I'll be waiting, for a while, to hear that apology, before I post on this blog again.

HDW was more than a mere “security risk,” as we have ample historical proof (different from legal proof) that he functioned as a Soviet asset. Why should we consider him an “internationalist,” when he gave his ultimate loyalty to one country, the Soviet Union? Are you denying the tremendous weight of evidence against him?

"... I read a few things about Harry Dexter White. He didn't even give a damn about even publishing himself to fame -- which he could easily do with all that human resources at his disposal. He just didn't give a damn about that kind of thing. It is difficult to understand what makes that kind of a man tick. Therefore one should refrain from passing judgement about the behaviour of such men, unless (a) he has been in close and intensive contact with them and (b) REALLY knows WHAT he is talking about (e.g., knows how to judge if one is security risk) and (c) possesses comparable intellectual capacity and character with the men in question. And I on my part don't know of any one who could possibly fit that bill, as it concerned Harry Dexter White, except perhaps Keynes himself, or maybe FDR."

Hence I cannot continue to post on this blog without keeping up a flag all the time like "the case against HDW has not been proven" -- but that would be boring to audience and I am too lazy to do that any way and so I don't want to do that either.

I stay away from the input window of this blog until BdL admits that he himself is not qualified to conclude and advance the proposition that HDW was "security risk" -- and extend an apology as well. I saw a piece written by the two daughters of HDW and it read like his survivors are very much saddened by the allegations, understandably so.

Your criteria (a, b, and c) are appropriate for the forensic arena, not the historical arena where we often make inferences about people we can’t meet. If the IMF authors (I don’t think they are professional historians) are right then it means Chambers is lying, Elizabeth Bentley is lying, Igor Gouzenko is lying, and all the Venona decrypts are misleading. Moreover, we have documents from Chambers (in response to the Alger Hiss slander suit against him) that include a long memo in HDW’s own handwriting. Do you really think all this evidence is defective? Spy services have a dictum they tell their operatives: “Admit nothing, deny everything-- make counter accusations. You can even buy a CIA tee shirt with that motto on it! I’m afraid the left will never give in on Hiss and White. No matter how much evidence gets produced, they will always postulate a big enough conspiracy to account for it.

At the level of power where HDW worked, the tactical "leak" is one of the essential levers of power. He was attempting to conduct his own slice of policy formation. (What comes to mind is a saying by Lyndon Johnson that in the political process, he'd rather have his enemies inside the tent where he could watch them, than outside...)

Remember the opening scene from the TV show, Mission Impossible? "And Mr Phelps, if you or anyone on your team is caught, the Secretary will disavow all knowledge..."

Please to remember that White worked in the cauldron of the Great Depression, and WWII at the side of Franklin Roosevelt's long time friend and loyalist, Henry Morgenthau, Jr. These guys were masters of back-channeling all sorts of information.

The fact that Chambers had a disjoint collection of memos in White's handwriting means not a whole lot, although it does appear that White did have contact with Chambers as early as the mid 30s. (I'm sure Chambers formally introduced himself as a KGB courier.) Perhaps White gave them to Chambers, perhaps White gave them to someone else in the Department & they "wandered" their way into Chambers' sticky hands. We're simply too far away to know for certain.

Given the enormity & complexity of the problems facing this particular group of economists (head count of about 40 I believe), I assume there were huge numbers of documents circulating at any given time. Hot projects are constantly juggled. What's HOT today is replaced the next day with yet another IMMEDIATE crisis.

The Bentley accusation about the occupation currency plates simply doesn't stand up. First she offered this "memory" in 1954, after not mentioning it in 1948. Very odd. Second, White was just one of many players involved in the decision... in the short run it was simply a reasonable way to keep the Russians happy.

Please to remember that in that conflict USA donated 400,000 dead... while the Russians put 20,000,000+ into the Nazi meat grinder. If the Russians didn't want to stop in East Germany, Patton's 3rd certainly wouldn't have stopped them.

The freshest & most in-depth account of White is Bruce Craig's "Treasonable Doubt." At the risk of giving away the plot... I believe Craig's conclusions are that yes, White passed information to the Soviets (probably knowingly... but do remember the Russians were doing by far the bulk of the dying in that war), but he was NOT a spy jumping to Uncle Joe's tune.

Unless you've been required to hang around with Monetary Policy economists, you're at a serious disadvantage in knowing how they think and what they think about.

Read Craig's book.

White was "simply" trying to avoid the Versailles Treaty disaster.

You've all read Keynes' "The Economic Consequences of the Peace," right?

At the level of power where HDW worked, the tactical "leak" is one of the essential levers of power. He was attempting to conduct his own slice of policy formation. (What comes to mind is a saying by Lyndon Johnson that in the political process, he'd rather have his enemies inside the tent where he could watch them, than outside...)

Remember the opening scene from the TV show, Mission Impossible? "And Mr Phelps, if you or anyone on your team is caught, the Secretary will disavow all knowledge..."

Please to remember that White worked in the cauldron of the Great Depression, and WWII at the side of Franklin Roosevelt's long time friend and loyalist, Henry Morgenthau, Jr. These guys were masters of back-channeling all sorts of information.

The fact that Chambers had a disjoint collection of memos in White's handwriting means not a whole lot, although it does appear that White did have contact with Chambers as early as the mid 30s. (I'm sure Chambers formally introduced himself as a KGB courier.) Perhaps White gave them to Chambers, perhaps White gave them to someone else in the Department & they "wandered" their way into Chambers' sticky hands. We're simply too far away to know for certain.

Given the enormity & complexity of the problems facing this particular group of economists (head count of about 40 I believe), I assume there were huge numbers of documents circulating at any given time. Hot projects are constantly juggled. What's HOT today is replaced the next day with yet another IMMEDIATE crisis.

The Bentley accusation about the occupation currency plates simply doesn't stand up. First she offered this "memory" in 1954, after not mentioning it in 1948. Very odd. Second, White was just one of many players involved in the decision... in the short run it was simply a reasonable way to keep the Russians happy.

Please to remember that in that conflict USA donated 400,000 dead... while the Russians put 20,000,000+ into the Nazi meat grinder. If the Russians didn't want to stop in East Germany, Patton's 3rd certainly wouldn't have stopped them.

The freshest & most in-depth account of White is Bruce Craig's "Treasonable Doubt." At the risk of giving away the plot... I believe Craig's conclusions are that yes, White passed information to the Soviets (probably knowingly... but do remember the Russians were doing by far the bulk of the dying in that war), but he was NOT a spy jumping to Uncle Joe's tune.

Unless you've been required to hang around with Monetary Policy economists, you're at a serious disadvantage in knowing how they think and what they think about.

Read Craig's book.

White was "simply" trying to avoid the Versailles Treaty disaster.

You've all read Keynes' "The Economic Consequences of the Peace," right?

Regarding that August 1944 "devestating" VENONA message... remember what White was trying to accomplish at that point in time... Bretton Woods had just happened & folks were trying to figure out if they wanted to go along.

White was working to get the ever suspicious Russians to JOIN the IMF... which they eventually declined to do.

As any top-notch salesman woud do, you work hard to keep the prospect interested... & if offering some additional information is what it takes, then so be it.

What I want to see is how information from White--a Keynsian, American, Capitalist--would translate to the mind of Marxist Russians.

The Russians were rightfull paranoid (you'd be too if you'd been invaded 3 times from Western Europe in 150 years) & I have to assume since the Russian political process is such a symbolic dance, they would assume the same of our political/decision making process.

White had the choice of telling he Russians to read The Congressional Record regarding what the intentions of the Bretton Woods "new world order" were... or really getting the Russians interested by picking up the information via the Silvermaster collection process.

Think about human nature... what do you pay attention to? What you read in the newspaper or the gossip you pick up around the water cooler?

I was in the German occupation. The choice was between the Western Allies and the Russians having the same occupation currency or different ones. Allied policy was to treat Germany as a single country so it made sense to have a single currency and rather than have a fleet of transport planes lugging piles of Allied Military Marks to the Soviets to giving them a set of plates. The mistake was allowing Allied personnel to convert the AM marks into home currency. But this was also policy in Japan. This gave GIs a wonderful opportunity to raid the Treasury: sell PX supplies to Germans and Russians at high scarcity prices and then semd dollars home. Same thing happened in Japan. Finally, the US Treasury in 1946 (?, I don't remember the exact date) stopped the conversion over the opposition ot the generals who sympathized with the GIs and probably also profited. White was still in charge of international finance at the time.

I have heard it said that one of the known motivations for doing the Occupation Currency the way it was done was to put spending money into the hands of both Russians & GIs... and the bill would eventually be picked up by the German economy, NOT the US Treasury.

The issue of poorly controlled occupation currency issues had already been encountered in the North Africa invasion.

I would posit, that given the complexity of the situation, the claim/charge (by Elizabeth Bentley, in 1954... well after her initial charges & White's death in 1948) that White single handedly made this happen totally ignores how things happen in government. No ONE person--in charge or not--makes unilateral decisions of this magnitude.

Umm - dare I mention the 'Mitrokhin Archive? 'Progressives' on both sides of the Atlantic had an almost physical need to believe in Stalin's USSR. The New Dealers who collaborated with the NKVD were not communists or even fellow travellers. They were Eric Hoffer's 'True Believers'. Or as JC put it, people who trusted in themselves that they were righteous and despised others: specifically ignorant peasants clinging to outdated concepts like patriotism and free enterprise.

For one of the most convincing pieces of evidence suggestive of White's complicity in Soviet espionage one can look at the facts relating to his preferred method of communicating information to his handlers ("tradecraft").

If readers take a look at VENONA decrypt # 1119-1121 of August 4-5 1944 (the so-called KOL'TsOV memo -- "Account of a Conversation with JURIST") we find the following: "He [White] proposed infrequent conversations lasting up to half an hour while driving in his automobile." Keep in mind this is 1944. Then take a look at Whittaker Chambers' seven-page statement of 6 December 1948 ("Subject W.C. Perjury, Internal Security. ESP D; 6 December 1948 Section 17 HDWhite BUFILE, serial 124-1333 in the FBI Reading Room in Washington D.C.). Here Chambers tells FBI agents that "Other times he [Chambers] would meet White and White would drive him around in his automobile during which time White would furnish Chambers information which he had written on pieces of paper and sometimes oral inforamation emanating from the Treasury Department." This is significant corroboration of WHite's preferred means of communication (via converesations in an automobile) as there is no evidence that Chambers knew anything of the VENONA project and in fact the KOLTSOV memo was not even decrypted until 1952.

In my recently released book TREASONABLE DOUBT (visit the webpage at: www.kansaspress.ku.edu/cratre.html)readers can examine all the known evidence relating to White's conspiratorial activities. Though I found no convincing documentation that he engaged in policy subversion (as Elizabeth Bentley asserted) nevertheless, the evidence of his complicity in the Washington D.C. based Soviet information gathering apparatus is undeniable.
R. Bruce Craig

For one of the most convincing pieces of evidence suggestive of White's complicity in Soviet espionage one can look at the facts relating to his preferred method of communicating information to his handlers ("tradecraft").

If readers take a look at VENONA decrypt # 1119-1121 of August 4-5 1944 (the so-called KOL'TsOV memo -- "Account of a Conversation with JURIST") we find the following: "He [White] proposed infrequent conversations lasting up to half an hour while driving in his automobile." Keep in mind this is 1944. Then take a look at Whittaker Chambers' seven-page statement of 6 December 1948 ("Subject W.C. Perjury, Internal Security. ESP D; 6 December 1948 Section 17 HDWhite BUFILE, serial 124-1333 in the FBI Reading Room in Washington D.C.). Here Chambers tells FBI agents that "Other times he [Chambers] would meet White and White would drive him around in his automobile during which time White would furnish Chambers information which he had written on pieces of paper and sometimes oral inforamation emanating from the Treasury Department." This is significant corroboration of WHite's preferred means of communication (via converesations in an automobile) as there is no evidence that Chambers knew anything of the VENONA project and in fact the KOLTSOV memo was not even decrypted until 1952.

In my recently released book TREASONABLE DOUBT (visit the webpage at: www.kansaspress.ku.edu/cratre.html)readers can examine all the known evidence relating to White's conspiratorial activities. Though I found no convincing documentation that he engaged in policy subversion (as Elizabeth Bentley asserted) nevertheless, the evidence of his complicity in the Washington D.C. based Soviet information gathering apparatus is undeniable.
R. Bruce Craig

For one of the most convincing pieces of evidence suggestive of White's complicity in Soviet espionage one can look at the facts relating to his preferred method of communicating information to his handlers ("tradecraft").

If readers take a look at VENONA decrypt # 1119-1121 of August 4-5 1944 (the so-called KOL'TsOV memo -- "Account of a Conversation with JURIST") we find the following: "He [White] proposed infrequent conversations lasting up to half an hour while driving in his automobile." Keep in mind this is 1944. Then take a look at Whittaker Chambers' seven-page statement of 6 December 1948 ("Subject W.C. Perjury, Internal Security. ESP D; 6 December 1948 Section 17 HDWhite BUFILE, serial 124-1333 in the FBI Reading Room in Washington D.C.). Here Chambers tells FBI agents that "Other times he [Chambers] would meet White and White would drive him around in his automobile during which time White would furnish Chambers information which he had written on pieces of paper and sometimes oral inforamation emanating from the Treasury Department." This is significant corroboration of WHite's preferred means of communication (via converesations in an automobile) as there is no evidence that Chambers knew anything of the VENONA project and in fact the KOLTSOV memo was not even decrypted until 1952.

In my recently released book TREASONABLE DOUBT (visit the webpage at: www.kansaspress.ku.edu/cratre.html)readers can examine all the known evidence relating to White's conspiratorial activities. Though I found no convincing documentation that he engaged in policy subversion (as Elizabeth Bentley asserted) nevertheless, the evidence of his complicity in the Washington D.C. based Soviet information gathering apparatus is undeniable.
R. Bruce Craig